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Why Is Conatus Pharmaceuticals (CNAT) Up 4.1% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Conatus Pharmaceuticals Inc. CNAT. Shares have added about 4.1% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is CNAT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Conatus’ Q1 Loss In Line, Revenues Beat Estimates

Conatus has incurred first-quarter 2018 loss of 17 cents per share, in line with the Zacks Consensus Estimate and wider than the year-ago loss of 14 cents.

Conatus has no approved product in its portfolio at the moment. The company recognized $9.7 million as collaboration revenues in the reported quarter related to an agreement with Novartis for the worldwide development and commercialization of Conatus’ lead candidate, emricasan.

Revenues surged 38.6% in the quarter under review compared with $7 million a year ago. This upside was driven by higher revenues derived from reimbursable costs connected to Novartis agreement and also owing to adopting the new ASC 606 revenue recognition standard. The top line also surpassed the Zacks Consensus Estimate of $9 million.

In the first quarter, research and development expenses were $12.1 million, up 53.2% from the year-ago period, mainly due to costs associated with the ongoing ENCORE studies on emricasan.

General and administrative expenses were $2.7 million, marginally down from the year-ago quarter.

Guidance

Conatus continues to expect its 2018 year-end cash balance between $35 million and $40 million.

However, with Novartis sharing half of Conatus’ development costs for phase IIb assessments on emricasan, the latter expects its current financial resources to be sufficient for funding operations through the end of 2019.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.

Conatus Pharmaceuticals Inc. Price and Consensus

Conatus Pharmaceuticals Inc. Price and Consensus | Conatus Pharmaceuticals Inc. Quote

VGM Scores

At this time, CNAT has a poor Growth Score of F, however its Momentum is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

CNAT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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